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19 July 2011 early edition/transcript/Part 6
Part 6 PHILIP DAVIES: I am not sure whether you acknowledged this at the start or not, but certainly the Chairman did: when we had our inquiry in 2009, the evidence given by News International executives was rather hopeless. They came with a game plan, which was to tell us that they did not know anything, they could not remember anything and they did not know anybody who would know anything. I wonder, just so that we can get off on a reasonable footing, what sort of coaching you have had for today. Who has advised you on how to handle this session and what was their advice? JAMES MURDOCH: With respect to today, after scheduling this appearance, we took some advice around the context of this sort of setting—it is my first time and, I think, my father's first time, in a Committee meeting like this—mostly on logistics, what sort of questions you would ask and so on. We were advised, fundamentally, to tell the truth, and to come and be as open and transparent as possible. That is my and my father's intent and intention, and we hope that we can show you that that is what is happening. DAVIES: Mr Murdoch senior, in answer to some questions from Mr Watson, you seemed to indicate that you had a rather hands-off approach to your company. The point you made was that the News of the World was less than 1% of your entire worldwide business, so you would not really be expected to know the ins and outs of what was going on. Could you just give us an illustration of how many times or how often you would speak to the editor of your newspapers—for example, how often you would speak to the editor of The Sun or to the editor of the News of the World? RUPERT MURDOCH: Very seldom. Sometimes, I would ring the editor of the News of the World on a Saturday night and say, "Have you got any news tonight?" But it was just to keep in touch. I ring the editor of The Sunday Times nearly every Saturday—not to influence what he has to say at all. I am very careful always to premise any remark I made to him by saying, "I'm just inquiring." I'm not really in touch. I have got to tell you that, if there is an editor that I spend most time with, it is the editor of The Wall Street Journal, because I am in the same building. But to say that we are hands-off is wrong; I work a 10 or 12-hour day, and I cannot tell you the multitude of issues that I have to handle every day. The News of the World perhaps I lost sight of, maybe because it was so small in the general frame of our company, but we are doing a lot of other things too. DAVIES: I understand, but perhaps I can help you out here. If somebody had told me that you would speak to someone like the editor of The Sun at least daily and maybe twice a day, would you recognise that description or would that be— RUPERT: No. DAVIES: You wouldn't historically—traditionally—have spoken to the editor of The Sun that number of times? RUPERT: No. I'd like to, but no. DAVIES: You said you speak to the editor of the News of the World, maybe on a Saturday night before publication—not to influence what they have to say, I understand that. I am intrigued as to how these conversations go. I would have imagined that, to the editor of the News of the World, it would go something along the lines of, "Anything to report?" or "Anything interesting going on?" And the editor of the News of the World says, "No, no, it's been a standard week; we paid Gordon Taylor £600,000". RUPERT: He never said that last sentence. DAVIES: Surely in your weekly conversations with the editor of the News of the World, with something as big as that—paying someone £1 million or £700,000—you would have expected the editor just to drop it into the conversation at some point during your weekly chat. RUPERT: No. DAVIES: You wouldn't have expected them to say that to you? RUPERT: No. DAVIES: So what on earth were you— RUPERT: Let me say, I did not really call him weekly, but I would have called him at least once a month, I'd guess. DAVIES: What would you discuss with them? If things like that were not on the agenda, what was on the agenda? RUPERT: I'd say, "What's doing?" DAVIES: Sorry? RUPERT: I'd say, "What's doing?" DAVIES: And what sort of response would you expect? RUPERT: He might say, "We've got a great story exposing X or Y" or, more likely, he would say, "Nothing special". He might refer to the fact that however many extra pages were dedicated to the football that week. DAVIES: But he wouldn't tell you about a £1 million payoff? RUPERT: No. DAVIES: It is just interesting to somebody like me. RUPERT: He would expect other people to tell me that, if anyone was to. DAVIES: James, would you acknowledge then that in your view you overpaid Max Clifford and Gordon Taylor? JAMES: I can't speak to the arrangements with Mr Clifford, as I do not have direct knowledge, in terms of—I was not involved in that piece. With respect to the Taylor piece, I made a judgment given the advice of counsel and the advice of the executives involved. Going back and looking at what we knew in 2008, looking at that advice, remembering that advice and looking at the context of the time, if we step back those three years, it was a decision that, given that context, I would still stand by, I think. DAVIES: It just seems— RUPERT: Apparently, there was a contract with Mr Clifford, which was cancelled by Mr Coulson. JAMES: I don't know about that. I don't know if you have knowledge of that. Mr Davies, sorry: you were going on? DAVIES: It just seems strange to me that— RUPERT: I don't know what was in the contract, but there was a particular break with Max Clifford. DAVIES: We might ask you to come back with details about that. It seems odd to me as a layman that while we are talking about £600,000 or £1 million, Andy Gray had his phone hacked and did not get £600,000, £500,000, £200,000 or even £50,000; he got £20,000. It seems bizarre that somebody can have their phone hacked and get £20,000 and somebody else gets their phone hacked and gets £600,000 or £1 million. Surely you can see that the distinction that most people draw is that one payment was made when it was all out in the open and everybody knew about all these things—Andy Gray—and the other was paid when it was trying to be kept rather quiet—£600,000. Do you not see that, to most people looking at that, it smells a bit? JAMES: Mr Davies, I understand where you are coming from and I understand that these are big sums of money we are talking about—£100,000, £200,000, £600,000. That is a lot of money, and you look at that and say, "Why would a company do that?" I would go back to my answer to Mr Sanders's question, which was, just to be precise about the chronology—I am not a lawyer, and I apologise, but my understanding— DAVIES: I got your answer to— JAMES: Mr Davies, I would like to answer this question. My understanding is that the £60,000 judgment in the Mosley case, which was after the advice given on the Gordon Taylor settlement, is an important chronology. Courts and judges have set a different standard here. What we knew, and what I knew, at the time was that we had senior distinguished outside counsel to whom we had gone to ask, "If this case were litigated, and if the company were to lose the case, what sort of damages would we expect to pay?" The company received an answer that was substantial. DAVIES: The answer was £250,000, so you settled for £600,000. We will move on— JAMES: It is important to be clear, Mr Davies. I apologise, but it is important to be clear. The £600,000 or £700,000 included damages, legal fees and an estimation of what it would have cost otherwise, because the other side of the negotiation understands this. So it is damages plus cost that gets you to that number. Respectfully, it is important to be clear about that. I agree: they are big numbers. DAVIES: I want to concentrate on payments that you have made to your staff. Going back to the trial of Glenn Mulcaire and Clive Goodman, Clive Goodman pleaded guilty to phone hacking, a criminal offence. Did News International pay Clive Goodman's legal fees for his trial? JAMES: I want to be clear about the chronology. First, I do not have first-hand knowledge of those times. Remember that my involvement in these matters started in 2008. In 2007, up until December, I was wholly focused in my role as chief executive of a public company. I was not involved in those things. DAVIES: Who would know? JAMES: I can try to answer the first question first. It is customary, in certain instances of employees with litigations, to pay some legal expenses on their behalf to try to bring all the evidence to a court. That has all been done, since I have had any involvement and knowledge of this, in accordance with legal advice about the proper way to do things. But I cannot speak to the 2007 arrangements; I do not have first-hand knowledge of those. DAVIES: Again, I will try to help out. Clive Goodman employed the services of a QC called John Kelsey-Fry. I do not know whether you have come across John Kelsey-Fry or whether he is a lawyer whom News International uses a lot. JAMES: He is not known to me. DAVIES: He is probably one of the most eminent lawyers in the country, certainly one of the most expensive ones. He is the sort-of go-to lawyer for celebrities; I think Steven Gerrard used him fairly recently. It seems odd to me that a journalist on the News of the World who is pleading guilty to a crime uses in mitigation probably the most expensive lawyer in the country, which obviously leads most people to suspect that his legal fees were not being paid by himself, but were being paid by News International. Given that he was pleading guilty to a criminal act—phone hacking—which presumably leads to summary dismissal over gross misconduct, why on earth would News International even think or dream about paying the legal fees of someone who was engaged in criminal activity and had committed something that was clearly gross misconduct? JAMES: Mr Davies, I do not have any direct knowledge of the specific legal arrangements with Mr Goodman in 2007, so I cannot answer the specifics of that question. What I can say—because I have asked the question as well, more recently than that, with respect to whom the company pays and what contributions to legal fees the company makes, and so on—is that I have been surprised that it is customary in here to sometimes make contributions to the legal costs of either co-defendants or defendants in related matters. This is legal counsel telling me this. I have no direct knowledge of the particular instance that you mentioned, and if you have any additional specific questions about that, perhaps, Mr Chairman, we can follow up with you on that. I am happy to do that. DAVIES: It is all very well, but these are issues that go back some time. I am surprised that you have not followed up on them already. Were any payments made subsequently to Clive Goodman and Glenn Mulcaire after their convictions? Did News International make any payments at all to those two people following their convictions? JAMES: I would like to answer that question. I think it is a good question, and it is a specific question. To my knowledge, because allegations were made that legal fees had been paid after that time in 2007 to those people, I asked the question myself and I was very surprised to find that the company had made certain contributions to legal settlements. I do not have all the details around each of those—not legal settlements, sorry; legal fees. I was very surprised to find out that that had occurred. DAVIES: Who authorised them? JAMES: They were done, as I understand it, in accordance with legal counsel and the strong advice— DAVIES: I did not ask who advised them. Who signed it off? Who at News International agreed to make those payments? Who signed the cheques? Who agreed to make those payments? JAMES: I do not know who signed off those payments. DAVIES: Well, who would? We talked about corporate governance earlier—you talked about the managing editor. Would you expect the managing editor to have made that decision? JAMES: It would have been the management of the legal cases, I would think. I am happy to go back and look at that, but it was not something that came to my attention for approval. DAVIES: But who would make that decision? RUPERT: I would just like to say that figures of that amount would certainly not come before, or have anything to do with, the managing editors. Q297 DAVIES: It wouldn't? Would it have been above the managing editor or below the managing editor? RUPERT: It would be above. JAMES: This would have been on legal advice payments made about how to handle litigations. Again, I do not have direct knowledge or details about the current status of those, but I can tell you that I was surprised as you are to find that some of those arrangements had been made. Q298 DAVIES: Mr Murdoch senior, I seem to be getting further with you, for which I am grateful. Would it have been Les Hinton? Would he have had to sign that off? RUPERT: It could have been. Q299 DAVIES: Would have been or could have been? RUPERT: Could have been. Q300 DAVIES: Who else could it have been? RUPERT: The chief legal officer. Are we talking about signing cheques or approval? Q301 DAVIES: Both. RUPERT: Signing cheques could be the assistant CFO, or someone, but it would be on the instructions of the chief legal officer. Q302 DAVIES: James, you said that you were not involved in the decision to get rid of Tom Crone. Whose decision was that? JAMES: The management of the company at the time. Q303 DAVIES: Who? JAMES: Recently, the chief executive Mrs Brooks. Q304 DAVIES: It was her decision. JAMES: She is the chief executive of the company, and senior-level personnel decisions are made by them. Q305 DAVIES: Stuart Kuttner left the company either the day, or the day after, allegations were made in The Guardian originally about phone hacking. Was that linked? Did he resign? Was he sacked? What happened to Stuart Kuttner, and how did he leave the company? JAMES: That I don't know; that would have been at the time a matter for News of the World. RUPERT: It is for you to ask him. Q306 DAVIES: Why did Les Hinton resign? RUPERT: Les Hinton resigned, sadly, last Friday, following Rebekah Brooks's resignation, saying, "I was in charge of the company during this period that we are under criticism for, and I feel I must step down." Q307 DAVIES: Were either Rebekah Brooks or Les Hinton asked to leave, or did they ask to leave? RUPERT: They both asked to leave. Q308 DAVIES: Why did you not accept Rebekah Brooks's resignation when she first offered it? RUPERT: Because I believed her and I trusted her, and I do trust her. Q309 DAVIES: So why did you accept it the second time around? RUPERT: In the event, she just insisted. She was at a point of extreme anguish Q310 DAVIES: Can you tell us how much all these characters have been paid off? How much have they been given as a financial settlement on their departure from News International? RUPERT: No, I can't tell you, but in the case of Mr Hinton, it would certainly be considerable, because there would be a pension for 52 years' service, and a great deal of thanks. Q311 DAVIES: Would it be ten million? Five million? RUPERT: Those are pounds? I do not know— JAMES: Those are confidential. RUPERT: They are certainly confidential. Q312 DAVIES: Is there any confidentiality in their pay-off that means that they are not supposed to speak about what happened, their time at your company or what they know? RUPERT: No. JAMES: Mr Davies, in the settlement or compromise agreement when somebody resigns or leaves the business in circumstances like this, there are commercial confidentiality agreements, but nothing that would stop or inhibit the executive from co-operating fully with investigations, from being transparent about any wrongdoing or anything like that. It is important to note that these agreements are made on the basis of no evidence of impropriety. If evidence of impropriety emerges or was there prior to that departure, you would have a different piece. That is an important point to be clear about. Q313 DAVIES: It seems on the face of it that the News of the World was sacrificed to try and protect Rebekah Brooks' position at News International. In effect, instead of her departure being announced, the News of the World was offered up as an alternative to try to deal with the whole thing. Do you now regret making that decision? Do you regret closing the News of the World to try to save Rebekah Brooks? In hindsight, do you wish that you had accepted her resignation to start with, so that that paper with a fine tradition could continue and all the people who are now out of work or are struggling to find a job could still be in work? RUPERT: I regret very much the fate of people who will not be able to find work. The two decisions were absolutely and totally unrelated. Q314 DAVIES: So when you came into the UK and said that your priority was Rebekah Brooks, what did you mean? RUPERT: I am not sure I did say that; I was quoted as saying that. I walked outside my flat and had about 20 microphones stuck at my mouth, so I'm not sure what I said. Q315 DAVIES: You were misquoted, so to speak. RUPERT: I am not saying that. I just don't remember. JAMES: Mr Davies, it is important to remember that the closure of a newspaper with a history of 160-some odd years is a grave and serious matter of regret for us and for the company. But much more serious than that is the violation of privacy, and the hurt that certain individuals at News of the World caused to the victims of illegal voicemail interceptions and their families. I can tell you that I advocated at the time that this was the step that we should take. This was a paper and a title that had fundamentally violated the trust of its readers. It was a matter of great regret and real gravity, but under the circumstances and with the bad things that were done at News of the World some years ago, it was the right choice for the paper to cease publication. It is important to note, and I want to be clear with the Committee on this, that the company is doing everything it can to make sure that we find re-employment, wherever we can, for journalists and staff at the News of the World who had nothing to do with any of these issues and who are completely blameless in any of these things. Many have done tremendous work journalistically, professionally and commercially for the business. The company is being as generous as we can under the circumstances, it is being as thoughtful and compassionate as we can for them and their families to get through this, but it is a very regrettable situation, and we did not take it lightly in any way. WHITTINGDALE: You have made that clear. Members, I am going to ask for brevity. I don't want to cut anyone off, but we have some way to go.